ENERGY BLOG

Month: May 2017

The IEA’s Oil Market Report forecast data was made publicly available yesterday [LINK] and didn’t have any impact on oil prices despite positive forecast data showing that global oil stocks could correct by 293.8 million barrels to year end 2017 with continued OPEC/Non-OPEC cuts, and Libya and Nigeria production at the last few months levels. Its probably because the EIA and OPEC recent May forecast data show much lower global oil stocks corrections – the EIA at 145.1 million barrels and OPEC at 45.5 million barrels. Given that global oil stocks were ~300 million barrels above the 5 year average at March 31, 2017, its easy to see why there isn’t any conviction to oil prices right now. Continue reading “Lets Hope The IEA Is Right, Oil Stocks Can Correct By 293.8 Million Barrels From Apr 1 To Dec 31”

Its all about OPEC and oil this week, but this meant that the most bullish we have heard on the LNG market rebalancing sooner than expected from Woodside’s May 23rd investor briefing in Australia have been overlooked. Woodside is another in a growing group to forecast LNG markets get rebalanced much earlier than expected. But they are the firmest in their views, saying it multiple times in the investor briefing, and they see this happening “around 2020”. As their Executive VP Marketing, Trading and Shipping said “I am a bit more bullish than our economists, I actually talk to customers out there”. At the end of 2016, the more common view was LNG rebalancing in 2023 to 2025. That view still seems reflected in the forward strips, which are well below current prices (ie. Henry Hub HH in 2020 is $2.84 vs $3.10 today). A LNG rebalanced market in 2020 should lift mid term Henry Hub (HH), which will in turn help drag up mid term AECO prices. This means that LNG rebalancing could well be the major factor that will set the tone and valuations for Cdn natural gas in 2018 and 2019. The Woodside presentation is at [LINK], and the webcast replay is at [LINK].

Once again, Q1 earnings calls, in particular the Q&A, has provided one (mostly overlooked) emerging oil and gas development that should be thought about by every oil investor. It wasn’t a transaction, or an earnings surprise, or change in outlook. Rather it was Core Laboratories (CLB) outlining their view of “four major industry trends that will shape tomorrow’s oil field”, in particular its “second major trend is the interest in using finer proppants in the initial procedures in a hydraulic frac program”. The implication of broader success with finer proppants is that there US oil production could surprise to the upside in 2018, which should keep investor attention and capital allocation on US and Canadian shale/tight oil, condensate rich and natural gas plays that win with new technology tweaks and are proving to work at lower and lower prices. Continue reading “Will Finer Proppant Be The Next Completion Tweak That Leads To US Shale Oil Surprising To the Upside In 2018?”